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So the largest problem here is the lack of competitiveness of Italian exports on the global market. That's creating a vicious cycle, where poorly performing exp
by logicx24 8y ago
So the largest problem here is the lack of competitiveness of Italian exports on the global market. That's creating a vicious cycle, where poorly performing exports depress wages and internal demand, leading the country to depend further on capricious foreign markets. This trend will continue, as lower-wage countries continue to intrude on traditional Italian products.
The solution should be to improve the competitiveness of Italian exports on the global market, which will serve as the foundation for economic growth. The article states this fairly plainly, and I agree. However, I don't think a government-led technological push, which the article advocates, is the solution to this.
Instead, the government should increase its spending on public infrastructure, while continuing to make structural reforms that allow businesses to organically diversify into more profitable areas. For all this article's talk about Italian labor deregulation, it's still very expensive to both grow and reduce labor in Italy. This is worsened by high corporate and individual taxes, which both depress demand and discourage business expansion. A middle class tax-cut, which worked well in Germany's "economic miracle," would help alleviate this.
And finally, Italy has major regional differences in wealth and productivity. The south of Italy is much poorer and much less productive, the result of years of subsidies that have prevented industry from sustaining private growth. Infrastructure improvements there, along with a reduction of crime, and the ever-present bogeyman of political corruption, would help tremendously, along with an overhaul of the redistributive system to encourage productivity and economic growth.